EcoRI fragments containing integrated viral and adjacent host sequences were cloned from two polyoma virus-transformed cell lines (7axT and 7axB) which each contain a single insert of polyoma virus DNA. Cloned DNA fragments which contained a complete coding capacity for the polyoma virus middle and small T-antigens were capable of transforming rat cells in vitro. Analysis of the flanking sequences indicated that rat DNA had been reorganized or deleted at the sites of polyoma virus integration, but none of the hallmarks of retroviral integration, such as the duplication of host DNA, were apparent. There was no obvious similarity of DNA sequences in the four virus-host joins. In one case the virus-host junction sequence predicted the virus-host fusion protein which was detected in the transformed cell line. DNA homologous to the flanking sequences of three out of four of the joins was present in single copy in untransformed cells. One copy of the flanking host sequences existed in an unaltered form in the two transformed cell lines, indicating that a haploid copy of the viral transforming sequences is sufficient to maintain transformation. The flanking sequences from one cell line were further used as a probe to isolate a target site (unoccupied site) for polyoma virus integration from uninfected cellular DNA. The restriction map of this DNA was in agreement with that of the flanking sequences, but the sequence of the unoccupied site indicated that viral integration did not involve a simple recombination event between viral and cellular sequences. Instead, sequence rearrangements or alterations occurred immediately adjacent to the viral insert, possibly as a consequence of the integration of viral DNA.